To date, Japan's automotive leader, Toyota Motors
Today, Toyota may not have actually fallen, but it has clearly stubbed a toe, emitted an anguished "Doh!" and begun to hop around on one foot. About a month ago, reports began to surface regarding a glitch in the software that runs the Prius, a glitch that can cause the engine to shut down. In traffic. At highway speeds. ("Doh," indeed.) Today, news broke that the National Highway Traffic Safety Administration (NHTSA) has opened an investigation into the Prius, and specifically 75,000 units from the 2004 and 2005 model years. So far, the NHTSA has received 33 reports of the vehicles inexplicably shutting down at highway speeds. Toyota said it's cooperating with the NHTSA.
The investigation comes at a particularly inconvenient time for Toyota, which last week announced plans to massively ramp up its efforts to saturate the U.S. hybrid market. The company aims to begin producing hybrid versions of its popular Camry sedan in the United States in late 2006 and is already thinking about creating a hybrid Corolla. Anticipating continued strong sales of its products, and of its hybrids in particular, Toyota further announced that it intends to set up its seventh North American factory (in Canada) in 2008 and is already planning an eighth factory, likely to be in either Mexico or the United States.
The runaway success of the Prius, which enjoys a 64% market share of U.S. hybrid sales, is the basis of those plans. But investors have to wonder how long Toyota's hybrid dominance can endure once tarred with the reputation of being the automotive equivalent of Microsoft's
All of this adds up to a potential reprieve for up-and-coming hybrid contender Ford
For more about Ford's hybrid offerings, read:
Fool contributor Rich Smith has no position in any of the companies mentioned in this article.